Purchasing a Home or First Time Buyer?
You’ve decided buy a home. Before you start looking at properties, Your Ottawa Mortgage Brokers at The Wilson Team want to make sure you get a solid understanding of your many mortgage financing options. There are many different mortgage products and programs that can help you get into the market – and more are being introduced all the time.
How much can you reasonably afford? An important step is to get a mortgage pre-approval. As a your Ottawa Mortgage Broker Professionals, we have all the details. Once you are pre-approved you will know your price range for properties, as well as what interest rate you can secure for a set period, usually 90 to 120 days (“mortgage rate-hold” period). Also consider what you can comfortably afford for a monthly or bi-weekly mortgage payment – factor in other costs such as car payments, leisure activities, savings etc.
A key hurdle for most first-time home buyers is saving up for a down payment, normally at least 5% of the value of the property. If your down payment is below 20% of the purchase price of the property, “high ratio” mortgage insurance fees are added on top of the mortgage amount. NOT TO WORRY as The Wilson Team can find you as little as the closing cost or as much a 7% cash back! We have so many products available but it’s important to know the fine print!
The Wilson team can help you with many programs still available such a Free Down Payment, Gifted Down, Borrowed Down, Flex down and up to 7% Cash back! We can even find you as little as your closing costs if that is all you need!
Please don’t forget to ask us about your Purchase Plus Improvements if you find your perfect home but it needs some TLC, renovations, or some upgrading! You can add the renovations to the purchase price so you don’t have to pay all of it out of pocket and do the renovations yourself which allows for saving money and flexibility.
FIRST TIME HOMEBUYER INCENTIVES IN ONTARIO
RRSP Withdrawal As Down Payment: $25,000
The Home Buyers Plan allows first-time home buyers to withdraw up to $25,000 PER BUYER, from an RRSP to purchase a home without having to pay tax on the withdrawal. The federal government recently increased the maximum amount to give additional access to their registered retirement savings plans (RRSP’s) for home purchases. The $25,000 per buyer does not HAVE to be used solely for down payment – it can be used for closing costs, paying off some debt, moving expenses, furniture, or even a vacation to celebrate! For more information, http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
First Time Homebuyers’ Tax Credit: $750.00
Through Canada’s Economic Action Plan, the federal government has introduced a First-Time Home Buyers’ Tax Credit (HBTC) to help with the purchase of a first home. This will assist first-time homebuyers with the costs associated with the purchase of a home, such as legal fees, disbursements and land transfer taxes. The HBTC amount will apply to qualifying homes purchased after January 27, 2009, and will provide up to $750 in a Tax Credit. For more information, http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html
Ontario Land Transfer Tax: $2,000
Ontario’s Land Transfer Tax is a provincial tax payable by the purchaser of a property. Therefore, if you purchase a property or land you are responsible for paying Land Transfer Tax to the Province at the time the transaction closes. First Time Homebuyers receive a reduction of up to $2,000.00 on Ontario Land Transfer Tax. Please note that there is also Toronto Land Transfer Tax payable if purchasing in Toronto “proper” however First Time Homebuyers do not pay on the first $400,000 value.
Certain conditions do apply and you must repay the funds back into your RRSP within 15 years (a minimum of 1/15th of the loan must be repaid each year) to avoid tax implications.
If you’re like most first time buyers, getting the most value for your housing dollar is crucial. With access to a full range of mortgage products and extremely competitive mortgage rates, Your Ottawa Mortgage Specialist can help you achieve your dream of home ownership.